Valdez v. Kismet Acquisition, LLC (In Re Icenhower) , 567 F. App'x 517 ( 2014 )


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  •                                                                               FILED
    NOT FOR PUBLICATION                               APR 08 2014
    MOLLY C. DWYER, CLERK
    UNITED STATES COURT OF APPEALS                          U.S. COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    In re: JERRY L. ICENHOWER, DBA                   No. 12-56953
    Seaview Properties; et al.,
    D.C. No. 3:09-cv-00589-BTM-
    Debtors,                           BLM
    GERALDINE A. VALDEZ; et al.,                     MEMORANDUM*
    Appellants,
    v.
    KISMET ACQUISITION, LLC,
    Appellee.
    In re: JERRY L. ICENHOWER, DBA                   No. 12-56954
    Seaview Properties; et al.,
    D.C. No. 3:09-cv-00590-BTM-
    Debtors,                           BLM
    GERALDINE A. VALDEZ; et al.,
    Appellants,
    v.
    *
    This disposition is not appropriate for publication and is not precedent
    except as provided by 9th Cir. R. 36-3.
    KISMET ACQUISITION, LLC,
    Appellee.
    Appeal from the United States District Court
    for the Southern District of California
    Barry T. Moskowitz, District Judge, Presiding
    Argued and Submitted February 11, 2014
    Pasadena, California
    Before: FARRIS, N.R. SMITH, and WATFORD, Circuit Judges.
    Attorneys Geraldine A. Valdez and Enrique Hernandez-Pulido appeal from
    the bankruptcy court’s imposition of sanctions. We have jurisdiction under 
    28 U.S.C. § 158
    (d)(1), and we affirm.
    Although the district court remanded to the bankruptcy court to reconsider
    the amount of sanctions against Valdez, we have jurisdiction to consider the legal
    question of whether the attorneys’ conduct was sanctionable. See In re Lehtinen,
    
    564 F.3d 1052
    , 1057 (9th Cir. 2009); In re Dyer, 
    322 F.3d 1178
    , 1187 (9th Cir.
    2003). And, although Kismet has relinquished any claim to the sanctions awarded
    against the attorneys, this does not moot the appeal. The sanction awarded against
    Hernandez — twenty hours of Continuing Legal Education in ethics — cannot be
    relinquished by Kismet. See Lasar v. Ford Motor Co., 
    399 F.3d 1101
    , 1108-09
    (9th Cir. 2005); Riverhead Sav. Bank v. Nat'l Mortg. Equity Corp., 
    893 F.2d 1109
    ,
    2
    1112 (9th Cir. 1990). The sanction awarded against Valdez — joint and several
    liability for roughly $700,000 in compensatory sanctions awarded against her
    client — was vacated by the district court. On remand, the bankruptcy court might
    award monetary sanctions payable to the court or a nonmonetary sanction, neither
    of which could be relinquished by Kismet. See Lasar, 399 F.3d at 1108-09;
    Riverhead Sav. Bank, 893 F.2d at 1112. Thus, Valdez has a legally cognizable
    interest in the outcome of this case.
    This Court “directly review[s] the bankruptcy court's decision.” In re
    Caneva, 
    550 F.3d 755
    , 760 (9th Cir. 2008). A bankruptcy court's imposition of
    sanctions pursuant to its inherent authority is reviewed for abuse of discretion. See
    Doi v. Halekulani Corp., 
    276 F.3d 1131
    , 1140 (9th Cir. 2002); cf. Cooter & Gell v.
    Hartmarx Corp., 
    496 U.S. 384
    , 405 (1990).
    Here, the bankruptcy court did not abuse its discretion. First, Valdez’s
    objections to the documents proposed by Kismet to transfer the Villa interest were,
    even if technically correct, substantially motivated by bad faith. See Dyer, 
    322 F.3d at 1196
    ; Fink v. Gomez, 
    239 F.3d 989
    , 992 (9th Cir. 2001). Valdez knew that
    her client would not sign even correct transfer documents, and her purpose in
    objecting was to delay implementation of the bankruptcy court’s judgment. See
    Primus Auto. Fin. Servs., Inc. v. Batarse, 
    115 F.3d 644
    , 649 (9th Cir. 1997).
    3
    Second, Valdez encouraged her client to obtain an amparo injunction in Mexico to
    delay and frustrate the required transfer of the Villa interest to Kismet, and
    Hernandez advised that the amparo should be recorded and concealed from
    Kismet. See Dyer, 
    322 F.3d at 1196
    ; Primus, 
    115 F.3d at 649
    . Even if his duty to
    protect client confidences prevented Hernandez from notifying Kismet of the
    amparo, he was not permitted to advise his client to keep the amparo secret, thus
    facilitating the amparo’s being recorded and used to impede implementation of the
    judgment.
    Finally, in light of the district court’s vacatur of the compensatory sanctions
    awarded against Valdez, her argument that those sanctions are not supported by a
    proper finding of causation is inapposite.
    AFFIRMED.
    4
    FILED
    Valdez v. Kismet Acquisition, LLC, No. 12-56953+                                APR 08 2014
    MOLLY C. DWYER, CLERK
    WATFORD, Circuit Judge, concurring in the judgment:                          U.S. COURT OF APPEALS
    I don’t think the bankruptcy court abused its discretion by deciding to
    sanction the two lawyers. But I do have concerns about the severity of the sanction
    imposed against Ms. Valdez.
    The picture that emerges from my review of the record is that of a lawyer
    doing her best to protect an obstinate client from the all-but-certain wrath of the
    bankruptcy court. Valdez advised Diaz-Barba to comply with the bankruptcy
    court’s judgment, and she told him in no uncertain terms that he risked being held
    in contempt if he refused to do so. Diaz-Barba rejected that advice. When it
    became clear that Diaz-Barba felt so strongly about the supposed illegality of the
    judgment under Mexican law that he was willing to be held in contempt, Valdez
    helped him pursue the amparo action. She had been advised by Diaz-Barba’s
    lawyers in Mexico that the amparo action would allow the Mexican courts to
    determine whether the bankruptcy court’s judgment in fact violated Mexican law.
    Valdez recognized that a ruling by a Mexican court validating Diaz-Barba’s
    reasons for refusing to comply with the judgment represented his best (and
    probably his only) hope of fending off contempt sanctions.
    Valdez can perhaps be faulted for some of the tactics she used in pursuing
    the amparo strategy; certainly the bankruptcy court didn’t abuse its discretion in so
    Page 2 of 2
    concluding. But I don’t think Valdez committed misconduct simply by deciding to
    pursue the strategy in the first place, which is the view that seemed to drive the
    severity of the sanction the bankruptcy court decided to impose. In my view, any
    sanction imposed against Valdez should be far less severe than the $700,000
    sanction that has now been vacated.